Power of the family: cross-country cultural differences and social engineering

Alberto Alesina, Paola Giuliano17 June 2007

Empirically, family structures affect economic choices such as labour market participation. This fact and the wide variety of family structures within the EU bring into question policies that seek to impose uniformity of social policies.

Less than 50% of Italian women are in the labour force, in Sweden 75% are. In the US, most college students aged 18-22 live away from home, often thousands of miles from their families. In Italy, college students live mostly at home and 27.8 is the median age of graduation. 82% of Italian men between 18 and 30 live at home with their mothers.

There is no question that the structure of the family varies widely around the world. Should economists care? We believe they should. The organisation of the family has important consequences for many economic decisions and attitudes, from participation in the labour force, home production, savings and geographical mobility to risk-taking, trust and social capital. A thorough understanding of how different attitudes towards the family influence people’s decisions is important in designing appropriate policies for different countries.

In a recent NBER working paper, we have considered the role of family ties on individual economic behaviour. Family ties capture the extent to which an individual sees himself or herself in isolation or as a long-lasting member of a tight family structure. Our measure of family ties is based upon answers to questions from the World Value Survey, capturing beliefs on the importance of the family in an individual’s life, the duties and responsibilities of parents and children, and love and respect for one 's own parents.

There is a wide variety of attitudes towards family ties across cultures, and the answers to the survey are consistent with most people’s impressions. Nobody would be surprised to hear that Italian families are much tighter than Scandinavian families, or that Latin Americans rely more on the family than people in ex-communist countries. But there are also some unexpected results. Many Asian countries, for example, appear to be very similar to Mediterranean and Latin countries.

Stronger family ties are associated with lower labour force participation, especially that of youngsters who stay at home longer, and that of women who have traditional roles in these societies as “guardians” of the household, fostering and protecting family ties. Thus stronger family ties mean more is produced at home and less in the market. Since official statistics only take market-production into account, countries with larger home production may have a downward bias in their measure of per capita GDP. This may also suggest that it is NOT the lack of child and care facilities that make women stay at home (an argument that one always hear as a self-evident truth, for instance in Italy), but it may be – right or wrong – the result of a family choice.

Strong family ties make people less willing to move in pursuit of economic opportunities, and so tend to reduce economic efficiency. On the other hand, strong family ties may make individuals feel “safer” and increase life satisfaction, at the expense of risk-taking. Also, family ties reduce trust towards non-family members, and in some cases they can even degenerate in “amoral familism”, the most extreme example being the traditional mafia culture of Southern Italy, in less extreme cases a reduction of social capital and interpersonal trust outside the family.

One may raise the usual chicken and egg question. For example, is it family ties that influence women’s participation in the labour force, or the other way around? Is it the economic structure of a country and its economic opportunities that influence the organisation of the family, or the other way around?

One way of answering this question empirically is to look at families of different nationalities, all living in the same country, namely the US. For example, do Italian and German families living in the US behave identically or do they maintain their cultural differences? We performed this check, finding that cultural difference persist even after at least two generations of immigrants. This means that cultural traits are persistent, although of course they are not cast in stone. Italian families today are certainly very different from what they were in the fifties, as are American families. How quickly these kinds of cultural traits evolve is a fascinating issue, which economists are only beginning to tackle.

Once the importance of cultural traits is recognised, it is very imperative that policy-makers be careful to avoid active social engineering in which certain behaviours are dictated, or encouraged by law - directly or indirectly. Also, policy uniformity across countries may not be feasible. The wide variety of attitudes towards the family within EU member countries, and the consequences for socio-economic behaviour that follow from this, bring into question the roots of the EU insistence on the uniformity of social policies which underlies the Lisbon agenda. Lisbon is a vacuous exercise in social engineering, which does not take into account cross-country cultural differences.

A. Alesina and P. Giuliano (2007) “The Power of the family” NBER WP 13051, or at IZA 2750.

The World Value Survey is a well respected compilation of national surveys on values and norms, containing information on a wide variety of attitudes and preferences, including politics, several contemporary social issues and religious behavior.